XRP, SOL Among Coins With Red Sentiment, Time To Buy Against Crowd?
February 06 2024 - 4:00PM
NEWSBTC
Data shows various cryptocurrencies like XRP and Solana are
currently witnessing bearish majority sentiment on social media
platforms. XRP, SOL, And Other Assets Are Sharing A Red Mentality
Currently According to data from the analytics firm Santiment, a
notable bearish sentiment has emerged among cryptocurrency traders
during the past week. The relevant indicator is the “Weighted
Sentiment,” based on two other metrics: the Sentiment Balance and
Social Volume. The Sentiment Balance keeps track of the net
sentiment present among users on the major social media platforms.
The metric calculates this score by reviewing social media posts
and applying a machine-learning model to filter for positive and
negative sentiments. Related Reading: Dogecoin Trounced:
Chainlink’s 34% Jump Kicks DOGE Out Of Top 10 List Once the
indicator has found the scores for these bullish and bearish
sentiments, it takes their difference to give the average or net
sentiment present among the traders. The other relevance metric
here, the Social Volume, tells us about the amount of discussion
related to any topic or term on social media platforms. The
Weighted Sentiment takes the Sentiment Balance and then weighs it
against this Social Volume. This means that the indicator’s value
only spikes (in either direction) when not only is there some
notable imbalance present in the market (that is, the net sentiment
has a significant value), but the volume of social media discussion
about these sentiments is also high. This fact makes the Weighted
Sentiment more reliable than the Sentiment Balance, as it can
provide a better picture of the trend among the traders as a whole
(since the Social Volume would only spike when there are many users
involved in discussions). Now, here is a chart that shows the trend
in the Weighted Sentiment for six different cryptocurrencies:
Bitcoin (BTC), Ethereum (ETH), BNB (BNB), XRP (XRP), Cardano (ADA),
and Solana (SOL). The value of the metric appears to be negative
for all of these assets right now | Source: Santiment on X As
displayed in the above graph, these assets have had a negative
Weighted Sentiment recently, suggesting that bearish sentiment has
dominated social media users. More specifically, the indicator is
around -0.36 for XRP, while it’s about -0.64 for Solana.
Historically, cryptocurrency markets have been more likely to move
in the direction opposite to what the crowd is expecting. As such,
price rebounds become more probable the more negative the sentiment
gets, while tops can occur when the traders share a highly bullish
mentality. Followers of contrarian investing exploit this to time
their buying and selling moves. Warren Buffet’s famous quote sums
up this idea, “be fearful when others are greedy, and greedy when
others are fearful.” Related Reading: Bitcoin CDD Shows Bullish
Breakout, Rally Returning In Full Flow? Given the red sentiment XRP
and others are witnessing, a contrarian trader might think it is
the right time to buy into these cryptocurrencies. XRP Price XRP
had attempted recovery earlier, but the move appears to have failed
as the asset has returned under the $0.50 level. Looks like the
price of XRP hasn't moved much recently | Source: XRPUSD on
TradingView Featured image from Shutterstock.com, charts from
TradingView.com, Santiment.net
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